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Monday, 30 April 2012

What was it Cameron was saying the other day about not associating himself with
anyone who carried out “aggressive tax avoidance”?

Jeremy can you remember what he said?

No?

Oh well I guess that's because you're too busy trying to sort out your tax affairs:

"The Culture Secretary was paid a dividend by the company he founded in the
form of half its office building. The offices were then immediately leased
back to the same company.

Accountants said that the deal allowed Mr Hunt to legally reduce his potential
tax bill by more than £100,000 because it was completed just days before an
announced 10 per cent rise in the tax on dividends in April 2010.

The Culture Secretary and his business partner, Mike Elms, transferred
ownership of their company’s office building in Hammersmith into their own
names in April 2010, just before the tax rate for the transaction rose to
42.5 per cent. They then leased the property back to Hotcourses, their
jointly owned education company, for 10 years.

By paying themselves the building as a dividend before the change in tax
rules, the two men saved themselves an income tax bill of £202,000 on the
£1.8 million deal, by paying tax on it at the rate of 32.5 per cent. The
company now pays them £60,750 a year in rent. No stamp duty was payable on
the property, which at the time would have been 4 per cent.

Mr Hunt and Mr Elms set up Hotcourses in 1991. Mr Hunt stood down as a
director in 2009, but remains a major shareholder in the company.

A spokesman for Mr Hunt said that all the Culture Secretary’s interests were
properly declared and approved by his department’s permanent secretary. “Mr
Hunt is a shareholder of Hotcourses and has not been an employee since the
end of December 2009. The only way he can receive income is as a dividend
paid to shareholders. As a shareholder, Mr Hunt has no responsibility for
the day-to-day running of Hotcourses, including any financial decisions.”

Mr Hunt owns 48.6 per cent of Hotcourses. In the previous financial year, it
paid £2 million in dividends, meaning Mr Hunt would have received £972,000.

Mr Elms said: “A dividend in specie [the name of the transaction] is the
correct way to pay a non-cash dividend and all appropriate taxes were paid.

“Mr Hunt has no responsibility for any financial decisions including the
nature, amount and timing of dividend payments to shareholders.”

Hundreds of companies brought forward their dividend payments to beat the tax
rise in April 2010."

Given that the entire world's attention will be focussed on the UK during the Olympics, Owen will learn that his political masters will not tolerate being blamed for this clusterfuck and will want the problem resolved and/or his head on a platter.

Labour MP John Mann, a member of the Commons Treasury
select committee, said Goldman Sachs should not defer tax payments when
it was able to pay now.

"It's morally and ethically wrong. These are people who are at the
heart of the problem in the financial world who've paid extraordinary
bonuses to their partners and aren't prepared to pay a fair amount of
tax. It's pure unadulterated greed."

Oh, FFS! With stupidity this unrestrained, it's a wonder John Mann
can tie his shoelaces, let alone get elected as an MP and serve on the
Treasury Committee.

A company's tax bill is determined by tax law. And its reported
profits are determined by accounting standards. Big companies report
their consolidated profits for all the countries in which they operate.

Now these two sets of rules are different. So it's hardly surprising
that sometimes they give different results.

While some of the
differences are about measurement, most of them are about timing. And
usually this means the financial reporting numbers are faster to
recognise profit than the tax man. The reason for that is to make it
more likely that there's cash to pay the tax bill when it arises.

Because the main difference is one of timing, accounting standards
force companies to account for these timing differences in their
financial statements. And that's where deferred tax comes in. But
deferred tax is a pure accounting concept. It's not something that
otherwise means anything.

So John Mann is being a prime fuckwit when he talks about Goldman
Sachs deferring their tax bill. The amounts that are reported as
deferred tax aren't due. They represent profits in the
financial statements that will give rise to a tax bill at some point in
the future but don't give rise to one now. Goldman Sachs might well be able to pay more now. But there is simply
no "more" tax bill to pay. Not until the profits reported this year
become taxable in future years.

Thursday, 26 April 2012

Oh dear, it seems that Hunt's Permanent Secretary is not publicly backing Hunt's version of events wrt Adam Smith's interactions with Murdoch.

"Five times in the House of Commons yesterday the Culture Secretary,
Jeremy Hunt, told MPs that the Permanent Secretary (the most senior
civil servant) at his Department approved the arrangements for the
dealings with the Murdochs over their planned takeover of BSkyB.

Twelve times in the Public Accounts Committee this morning , the
Permanent Secretary at the Department for Culture, Media and Sport
himself refuses to answer questions about whether he DID approve those
arrangements - namely that Adam Smith, Mr Hunt's special adviser who
resigned yesterday, could liaise with News International."

Wednesday, 25 April 2012

Politicians can be rather a loathsome bunch of individuals. Aside from breaking election promises and habitually lying to the voters, they treat each other with contempt (especially when they try to save their own skins).

Such is the treatment meted out to Adam Smith, Culture Secretary Jeremy
Hunt's special adviser, who has been forced to quit in order to try to save Hunt's skin.

For why has he been forced out?

The enormous row (that is growing in strength and ferocity) over contact between Hunt's
office and News Corporation re the BSkyB bid. Emails released on Tuesday showed that Adam Smith had been in contact with the company about its takeover bid.

Smith therefore has been sacrificed, in the hope that Hunt won't need to be.

It is of course ironic, and very instructive (as to how politicians stab each other in the back), to see that last night Number 10 insisted that Smith would not go.

Doubtless Number 10 will blame Smith's departure on an "invisible hand", but we know better don 't we children?

Here is Smith's "resignation" statement issued (and I assume written) on his behalf:

"While it was part of my role to keep News Corporation informed
throughout the BskyB bid process, the content and extent of my contact
was done without authorisation from the Secretary of State.

I do not
recognise all of what Fred Michel said, but nonetheless I appreciate
that my activities at times went too far and have, taken together,
created the perception that News Corporation had too close a
relationship with the department, contrary to the clear requirements set
out by Jeremy Hunt and the permanent secretary that this needed to be a
fair and scrupulous process.

Whilst I firmly believe that the process
was in fact conducted scrupulously fairly, as a result of my activities
it is only right for me to step down as special adviser to Jeremy
Hunt."

Is it not a bit selfish of her to deprive someone who really needs council housing of a place to live, given that she has several addresses at which she could live and that Newham is currently conducting social cleansing in time for the Olympics?

Monday, 23 April 2012

David Cameron dug himself into another hole today, by discussing his dislike of "aggressive tax avoidance" (which of course is perfectly legal).

Tax Journal reports that John Humphys noted on this morning’s Today programme that the
Chancellor said in the Budget that he regarded tax evasion and
‘aggressive tax avoidance’ as ‘morally repugnant’.

He was trying to clarify, he said, what the government meant by
‘aggressive tax avoidance’ and offered Cameron a case study:

"A very
successful businessman (you’ll know who I’m talking about) creates a
structure that transfers most of the ownership of [his] company to his
wife through offshore companies based in the Channel Islands. She lives
in Monaco, he takes a huge dividend – it’s paid to her, it’s estimated
that this reduces his tax bill by hundreds of millions of pounds.’

Cameron declined several times to answer the question, saying he was
not going to discuss an individual’s tax affairs. Humphrys said Cameron
knew that the individual was Sir Philip Green, whom Cameron recruited to
advise the government.

Cameron said he did not know Green’s tax affairs and offered his own definition.

‘There are things that people do that reduce their tax liability, for instance they put money into a pension scheme.’

‘Rather than Monaco,’ Humphrys said.

‘Absolutely,’ Cameron said. ‘I think putting money into a pension
scheme is a sensible thing to encourage people to do and that doesn’t
count as aggressive tax avoidance … I’m very clear about the difference
between putting money into pension schemes or Enterprise Investment
Schemes to help start-up businesses, and there is that form of tax
avoidance where people are almost specifically setting up a company in
order to avoid tax rather than actually wanting to invest in start-ups
and the rest of it.’

The government had taken a lot of steps to try to reduce ‘this sort
of activity’, Cameron added. ‘For instance we have put £900m extra into
HMRC to enable them to go after aggressive tax avoidance.’

Aggressive tax avoidance was wrong, he said. ‘It’s right that the
government is going after this activity. Everyone should pay their taxes
properly.’

Generally speaking, he told Humphrys, it was ‘sensible’ for a Prime
Minister not to have dealings with people engaged in aggressive tax
avoidance."

So there you have it folks, "aggressive tax avoidance" is whatever the government chooses to define as "aggressive tax avoidance"; the fact that it is perfectly legal seems to escape them.

Georgie Porgie and Cameron need to be reminded of the wise words of Lord Templeman in 1992:

"There is no morality in a tax and no illegality or immorality in a tax avoidance scheme."

Saturday, 21 April 2012

As I have stated before, it's not just the politicians who are hypocrites but also the media who feed off them.

Step forward the bastion of the "moral left" the Guardian, which yesterday published an article about the finances of David Cameron's family under the attention grabbing headline "Cameron Family Fortune Made in Tax Havens".

I will allow one of my ICAEW chums, Christie Malry, to explain why this story is bollocks:

David Cameron's father ran a network of offshore investment funds to
help build the family fortune that paid for the prime minister's
inheritance, the Guardian can reveal.Though entirely legal, the funds were set up in tax havens such as
Panama City and Geneva, and explicitly boasted of their ability to
remain outside UK tax jurisdiction.

Er, no (emphasis added):

The structure employed by Cameron senior is now commonplace among
modern hedge funds, which argue that offshore status can help attract
international investors. UK residents would ordinarily have to pay tax
on any profits they repatriated, and there is nothing to suggest the Camerons did not.

So they've put a bunch of money into a place where it's not subject
to UK tax. They'll be subject to UK tax whenever they bring any money
back to the UK and there's no evidence or allegation that they haven't
complied with their tax obligations at all.

This isn't tax avoidance, because not even the mighty brains at The
Guardian seem to be able to articulate precisely what taxes have been
avoided."

Well said Christie!

Now there is of course another point to be made about the Guardian's hissy fit over tax avoidance (even though their story states clearly that there is no avoidance in this particular case), what of the Guardian's own dealing with HMRC and it's use of Auto Trader as a possible "vehicle" (pardon the pun) for tax avoidance?

"There’s a reorganisation from the Scott Trust to the Scott Trust Limited in 2008.

2008 is also when that 50% sale of Autotrader went through, leading
to the £300 million profit which was not taxed: quite righteously not
taxed because it was a subsidiary of Scott Trust Limited and the sale of
a subsidiary of a limited company is not, under the SSE rules, subject
to corporation tax (technically, a chargeable gain).

The question is: if the Scott Trust had not reorganised into the
Scott Trust Limited, would some form of tax have been due on that £300
million?

That is, did the reorganisation alleviate some of the tax bill on that capital/chargeable gain?"

Oh, and by the way, don't forget that the Guardian Media Group set up a Cayman Islands company to minimise its own tax liability.

Friday, 20 April 2012

"Congratulations to the coalition government for providing an object
lesson in how to turn a drama into a crisis, by causing panic buying of
petrol and a petrol shortage in the run up to a possible tanker drivers'
strike."

Well now it appears that the government, contrary to popular belief, really did have a plan.

Yes, really!

The plan was not to help us drive during a tanker strike, but to save the country from recession by manipulating the statistics.

"Figures from the Office for National Statistics (ONS) showed a 1.8%
month-on-month
increase in retail sales volumes and a 3.3% year-on-year rise. The
increase was above economist forecasts, and were partly helped by a 4.9%
increase
in petrol purchases."

Huzaah!

Well done the coalition government for saving us from the recession, and for showing us all that you really do know how to manipulate people!

Thursday, 19 April 2012

Ken Leninspart, the Labour candidate to be Mayor of London and opponent of NHS privatisation, has been outed by City A.M. as a user of private health services.

A spokesman for Leninspart tried to spin the revelation of hypocrisy away, by claiming that Leninspart only uses an
“external provider” for annual check-ups.

That won't wash, private check-ups generally cost anything from several hundred pounds
to several thousand; and for a man who claims to be anti privatisation it is rank hypocrisy to use an "external provider".

Wednesday, 18 April 2012

This Is Local London reports that a Conservative councillor and GLA member Brian Coleman is under investigation for allegedly misusing his councillor’s parking permit to avoid off-street parking fees on Sunday.

The badges are handed to Conservative politicians on Barnet Council for use on authority business only. Coleman allegedly used his badge whilst he accompanied Boris Johnson on a visit to Golders Green

This allegation, if true, is rather ironic given that, apart from being one of the highest paid councillors in Britain, Coleman was the one who introduced the charges in the first place.

It is nothing new that politicians and their servants in Whitehall try to keep things hidden from the voters. Only today has the Foreign Office finally made public the first batch of thousands of "lost" colonial era files previously believed to have been destroyed.

The documents were secretly sent back to the UK, when former
colonies became independent. However, the Foreign Office only admitted last year that it held some
8,800 files at Hanslope Park which were "migrated" to
Britain from colonies at the time of independence because of their
sensitivity.

The Independent reports that over 1,200 of these records were released today at the
National Archives in Kew, the first of six tranches in
process due to be completed by November 2013.

I wonder what else the government and Whitehall deny that they have, yet actually exists?

Monday, 16 April 2012

"The government, for reasons best known to itself, has decided to play up
to people's prejudices and encourage media hysteria over the tax
affairs of people classified as "rich".

This is rather odd, given that Cameron, Georgie Porgie (Chancellor of
the Exchequer) and their associates are not exactly short of a few bob
themselves. Anyhoo, wee Georgie has today expressed shock at the fact
that some "rich" people organise their tax affairs in a manner so as to
reduce their tax burden.
"

A week, as the old saying goes, is a long time in politics. Georgie Porgie has now released data showing the tax paid by those who he defines as "rich".

"so it is striking quite how many people paid tax greater than 40% - a
proportion 10 times greater than those who succeeded in paying almost no
tax. Or to put it another way, perhaps the highest earners have had a
slightly unfair press, because the majority of them seem to have been
paying their proper share."

I noted last week that Georgie's policy of:

"Whipping up the media into a fire storm of hysteria over this may serve a short term political goal"

Sunday, 15 April 2012

"The proposed £5,000 cap is 10 times lower than that previously put
forward by David Cameron, but Miliband told the BBC's Andrew Marr Show
that the cap should not affect the system under which three million
union members individually make a £3 payment to Labour's coffers, a
payment which is automatically debited from members."

The Prime Minister, David Cameron, has let it be known that he is "very relaxed" about
publishing his tax returns and believes the "time is coming" for
politicians to be more open about their personal finances.

That sounds all very nice and "open", until that is you actually think things through and realise that at tax return does not show background wealth (eg trusts, inheritance etc). You only have to look at the ongoing spat that erupted between Boris Johnson and Ken Livingstone over the "accuracy", or otherwise, of their recently published tax returns to see how such "openness" achieves nothing.

Politicians who claim that they are "relaxed" about publishing their tax returns are playing to the gallery and are being disingenuous, their tax returns will reveal little more about their true wealth.

Tuesday, 10 April 2012

The government, for reasons best known to itself, has decided to play up to people's prejudices and encourage media hysteria over the tax affairs of people classified as "rich".

This is rather odd, given that Cameron, Georgie Porgie (Chancellor of the Exchequer) and their associates are not exactly short of a few bob themselves. Anyhoo, wee Georgie has today expressed shock at the fact that some "rich" people organise their tax affairs in a manner so as to reduce their tax burden.

“I was shocked to see that some of the
very wealthiest people in the country have organised their tax affairs, and
to be fair it’s within the tax laws, so that they were regularly paying
virtually no income tax. And I don’t think that’s right.

I’m talking about people right at the top. I’m talking about people with
incomes of many millions of pounds a year. The general principle is that
people should pay income tax and that includes people with the highest
incomes.

I’m not allowed to be shown the names of the individuals but I’ve sat with
the most senior people at the Inland Revenue, the people who run some of the
high net worth units there. They have given me examples, anonymised
examples, and so we are taking action."

Georgie claims that he was shown anonymised tax returns of "rich" individuals who were paying a tax rate of "only" 10% or less on their income.

Well Georgie someone was having a laugh with you, the tax returns were yours!

All "joking" aside, as Chancellor how is that this is only now "news" to Osborne??

Whipping up the media into a fire storm of hysteria over this may serve a short term political goal. However, it will come back to bite the Tories on their arses:

1 Tax avoidance is legal

2 George, his friends and the boards on which they sit use the services of accountants, trust funds, schemes etc etc to reduce their tax bills.

Sunday, 8 April 2012

David Cameron appears to have had an attack of the "Samantha Bricks", and has completely lost touch with reality. He is proposing that sites that host music videos, that he claims to be "raunchy" (eg those featuring Beyonce), should block children under the age of 18 from watching them and that music videos should have certificates.

For why?

Apparently it is harmful for under 18's to see attractive people gyrate in a "sexual fashion" to music.

Needless to say, it appears to be perfectly OK for children to witness violence and cruelty as meted out on a daily basis on soap operas and the news.

I appreciate that Cameron has had a self inflicted lousy few weeks; what with the "Granny Tax", Pastygate, private dinners, government surveillance etc etc. However, using this as an attempt to divert people's attention from these and other issues (eg has he forgotten the recession and austerity?) is absolutely pathetic and indicates that he has completely lost touch with reality.

How did London mayor Boris Johnson find the time to earn £900,000 on the side?

The staggering sum, which he has described as “chicken feed”, comes on top of his lavish £143,911 taxpayer-funded salary"

This faux "outrage" is really rather "odd" given the pay that the Trinity Mirror's (owner of The Daily Mirror) CEO Sly Bailey actually receives:

"The pay package handed out to Trinity Mirror (LSE: TNI) boss Sly Bailey has had shareholders up in arms of late, and it's easy to see why.

With executive pay becoming increasingly disconnected from the money
they actually earn for their employers (that is, their shareholders),
disaffection is spreading amongst the ranks of everyday investors, and
their voices are becoming increasingly harder to ignore in the country's
boardrooms.

In this case, big investors are airing their
displeasure too, after chief executive Ms Bailey was paid a total of
£1.3m in cash, shares and pension contributions in 2011, despite Trinity
Mirror having only last month reported a 40% fall in pre-tax profits,
capping a dismal few years of falling profits, suspended dividends, and
worrying levels of debt.

Collapsing value

The
share price has collapsed too, falling from a 2009 peak of 192p to just
37p today, meaning that Ms Bailey has presided over a slashing of the company's capitalization. When she took over the top job in 2003, Trinity Mirror was valued at £1.1bn -- today it is worth just £97m.

The
company's pension fund is suffering too, as the company has had to
pursue a deal with its trustees to pare back its contributions in order
to pay its dues to some of its creditors.

To answer some of the
criticisms, the board of directors has decided to halve the value of any
future cash bonuses paid to Ms Bailey, reducing it from a maximum of
110% of her basic salary to 55%.

Investors not calmed

But
the move looks unlikely to stem the unrest, as they appear unwilling to
budge on the overall levels of the boss's pay package, with share-based
incentives boosted to compensate for any potential cash loss.

The
board's actions appear to be at least partly aimed at avoiding a
shareholder revolt at its upcoming AGM in May -- last year 11% voted
against the CEO's pay deal, and a higher level of protest is expected
this year.

But will it succeed in heading off the madding crowds?
Major investors in Trinity Mirror include Schroders, Aviva, Standard
Life, Royal London and Legal & General -- we'll find out next month
whether they have the courage to press for shareholders' rights."

Maybe The Mirror hasn't been told what their CEO receives, or maybe The Mirror is simply being hypocritical?

Tuesday, 3 April 2012

Exaro reports that the
Home Office has made A4e (the jobs agency being at the centre of a major fraud probe) the preferred bidder to take over the Equality and Human Rights Commission (EHRC) helpline to advise
people of their rights in discrimination cases.

This despite the fact that ministers have ordered an audit of
‘all’ Whitehall contracts with A4e, to run alongside two current police
inquiries regarding allegations of attempted fraud involving the
company. The Department for Work and Pensions (DWP), which provides most
of A4e’s UK income, is also conducting an investigation.

A4e has been ‘preferred’ over the Citizens Advice Bureau, as well as
Sitel, which ran the disability helpline for the EHRC before it was
taken in-house, and Vertex, an international business processing
company. The decision puts A4e in pole position to take over the
service, despite the current controversy.

I wonder if anyone has told the Home Office that there are some fraud probes going on?

George Osborne's recent budget has caused the Tories a wee bit of a backlash amongst the pasty eating classes. However, pasties aside, another controversial area of his budget was the media dubbed "granny tax".

Osborne has attempted to defend his position by noting that it is not a "tax" per se and that, in cash terms, pensioners are no worse off.

All well and good, maybe, if one only reads and focuses on his current defence/explanation. However, go back but one year and you will see that wee Georgie promised to increase Age Related Allowance by the RPI.

1.128 As announced in the June Budget 2010, the Government has reviewed how the CPI can
be used for the indexation of taxes and duties while protecting revenues. Consistent with this,
the default indexation assumption for direct taxes will be the CPI from April 2012. To
ensure employers and older people do not lose out, for the duration of this Parliament the
annual increases in the employer NICs threshold, and the age related allowance and
other thresholds for older people, will be over-indexed compared to the CPI, and will
increase by the equivalent of the RPI. The Government will review the use of the CPI
for indirect taxes once its ﬁscal consolidation plans have been implemented and the
duty increases it inherited from the previous Government have come to an end.BUDGET 2012 page 34

Age-related Allowances...

1.200 To support the goal of a single personal allowance for taxpayers regardless of age, and
to spread the tax relief fairly across working age people and pensioners, from 6 April 2013
existing ARAs will be frozen at their 2012–13 levels (£10,500 for those born between
6 April 1938 and 5 April 1948, and £10,660 for those born before 6 April 1938) until
they align with the personal allowance. From April 2013, ARAs will no longer be
available, except to those born on or before 5 April 1948. The higher ARA will only
be available to those born before 6 April 1938. These changes will simplify the system and
reduce the number of pensioners in Self Assessment."

On June 25 2009 David Cameron made a speech to Imperial College London, entitled
Giving Power Back To The People, in here are a few choice quotes:

“If we want to stop the state controlling us, we must confront this surveillance state....

Every month over a thousand surveillance operations are carried out, not
just by law enforcement agencies but by other public bodies like
councils and quangos. And the tentacles of the state can even rifle
through your bins for juicy information. ...

The balance of power in our country has shifted away from the individual
- just trying to live their life and towards the state and its agencies
- constantly probing, prying and picking on people."

Move forward to 2012, and we see the same David Cameron advocating state snooping on the details of
every phone call made, every email sent and every web page visited by
British citizens.

"Its purpose: to intercept, decipher, analyze, and store vast swaths of
the world’s communications as they zap down from satellites and zip
through the underground and undersea cables of international, foreign,
and domestic networks. The heavily fortified $2 billion center should be
up and running in September 2013.

Flowing through its servers and
routers and stored in near-bottomless databases will be all forms of
communication, including the complete contents of private emails, cell
phone calls, and Google searches, as well as all sorts of personal data
trails—parking receipts, travel itineraries, bookstore purchases, and
other digital “pocket litter.”....

Everybody’s a target; everybody with communication is a target.”

Terrorism is used as Nanny's catch all excuse to cover all of her
rapidly expanding surveillance requirements. In truth, our lives are not
being blighted on a daily basis by terrorism but by "low level" crime
(yobbery, thuggery, robbery, scummy behaviour etc). These are the issues
that need to be addressed.

In this volte face, we see politicians revealing their true nature; dishonest, power hungry snoopers.

Good luck everyone, we are entering an era where will be watched, monitored and manipulated by the state as never before!